Connected TV. Faculty: Law :Study area: Law, notaryship and criminology Programme: Master in Intellectual Property Rights

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1 Faculty: Law :Study area: Law, notaryship and criminology Programme: Master in Intellectual Property Rights Connected TV Jurisdictional challenges in a converged media environment Master thesis submitted by Raf SCHOEFS Student number: To obtain the degree of Master in Intellectual Property Rights Promoter: Professor Peggy VALCKE Academic year

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3 Acknowledgments This thesis is written as a completion to the Master of Laws in Intellectual Property Rights (with track ICT law), pursued at the Hogeschool- Universiteit Brussel (HUB). Although the main focus of the programme was on intellectual property rights, I have chosen a subject within the field of European media law, as I wanted to get as much as possible out of the programme. The purpose of this research is to study the impact of connected television on the existing regulatory framework, in particular its impact on the determination of territorial jurisdiction, under Directive 2010/13/EU on Audiovisual Media Services, in an environment characterised by the convergence of television and Internet. Connected television caught my attention after I attended the annual symposium of the Flemish media regulator in December 2012, during which the influence of connected television on the Flemish media industry was discussed. From that point on, the research and drafting of this thesis can be compared to a thrilling rollercoaster ride: a slow but steady start, followed by an intense period of ups and downs, eventually leading to a more than satisfactory end result. I would like to thank my promoter Professor Peggy VALCKE for her inspiring suggestions and constructive feedback. Without her guidance, the end result would not have been of the same quality as it is now. Finally I would also like to thank Ellen LAUMANS and Elaine DAVIS for proofreading this thesis. 1

4 Table of contents 1 The rise of connected television The criterion of editorial responsibility under pressure Editorial responsibility New players entering the content delivery value chain Effective control The selection of the programmes The organisation of the programmes Split control The way forward The country of origin principle under pressure Determining the competent jurisdiction within the EU The country of origin principle and its derogations Jurisdiction over gatekeepers Measures against the circumvention of national legislation Jurisdiction over content delivered over the Internet from countries outside the EU but targeting the EU The extraterritorial application of EU law: Old Wine in new bottles: the data protection case Conclusion Bibliography

5 1 The rise of connected television 1. The aim of this thesis is to analyse the implications of connected television on determining jurisdiction under Directive 2010/13/EU on Audiovisual Media Services (hereafter AVMSD ). 1 The transformation in the audiovisual media landscape has the potential to create a new viewing experience for audiences and new opportunities for businesses. However, many questions arise and a lot of pressure is put on the current regulatory framework. 2 In order to open a public discussion on media convergence, the European Commission published a Green paper on this topic in April Addressing all issues highlighted in that Green Paper would be undesirable and even impossible within the scope of this thesis. Therefore we will only focus on the jurisdictional challenges. 4 In the first section we will analyse whether providers of connected services can be regarded as media service providers within the meaning of the AVMSD. In the second section the focus will be on determining the competent territorial jurisdiction in a connected media environment. 2. Connected TV, sometimes referred to as smart TV or hybrid TV, is often described as the integration of internet services into television sets and set- top boxes, allowing users to consume a variety of services simultaneously on one screen. Connected TV is however a broader concept that should be understood in light of the convergence between television and Internet. Therefore it is better to refer to connected TV as a means by which multiple sources of audiovisual content, services and applications can be delivered to, and consumed via, a multitude of different devices and platforms, in many different ways. 5 As it is becoming possible for linear and non- linear audiovisual services and numerous other communications services to be consumed on one and the same screen, lines are blurring quickly between the familiar twentieth century consumption patterns of linear broadcasting received by TV sets and the on- 1 Directive 2010/13/EU of the European Parliament and of the Council of 10 March 2010 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services ( Audiovisual Media Services Directive ), Oj.L. 95, 15 April 2010, M.A. TROJETTE (reporter), La télévision connectée, Rapport au ministre de la culture et de la communication et au ministre chargé de l industrie, de l énergie et de l économie numérique, November 2011, 3 European Commission, Green paper Preparing for a Fully Converged Audiovisual World: Growth, Creation and Values, 24 April 2013, COM(2013) 231 final, Pursuant to its Green Paper, the European Commission wants to open a broad and public discussion on the implications of the on- going transformation of the audiovisual media landscape, which is characterised by a steady increase in the convergence of media services and the way in which these services are consumed and delivered. 5 Cable Europe, Cable delivers Connected TV, 7 June 2012, europa.eu; For more information about the applied technologies and business opportunities we refer to the several (position) papers on connected television of the European Broadcasting Union, the association of television and radio sales houses (EGTA) and the Networked and Electronic Media Initiative (NEM). 3

6 demand services delivered to computers. 6 As a consequence of this convergence, it is now barely apparent to the user what kind of service is being consumed, which in its turn leads to legal uncertainty as to the level of protection that can be expected The main rationale for the regulation of audiovisual media services at EU level has been the internal market, with the country of origin principle at its core. Hence a minimum set of common rules covering aspects such as advertising, the protection of minors and promotion of European audiovisual works has been laid down in the AVMSD. The AVMSD currently does make a distinction between linear (television broadcasts) and non- linear (on- demand) services, but does not yet take into account the convergence between television and Internet (in particular information society services ). The aforementioned distinction made sense in 2007, but seems less appropriate in a converged media environment with a focus on Internet TV and automated selections tools. 4. Hybrid (or connected) services offered via a connected TV constitute a new generation of media services that are difficult to grasp in legal terms. With these services, not all elements of the definition of an audiovisual media service 8 may be fulfilled for the overall service. Moreover the criterion of editorial responsibility, which is currently applied to designate the responsible media service provider, becomes problematic in a converged environment characterised by a variety of new players, such as device manufacturers, platform operators and aggregators. Therefore we will analyse the concept of editorial responsibility in order to see whether or not there is a need to adapt the definition of audiovisual media provider to increase the level of protection and to restore fair competition and the level playing field by making those currently outside the AVMSD subject to part or all of the obligations of the AVMSD. 5. Once the issue of editorial responsibility has been clarified and consequently the audiovisual media service provider has been identified, we will analyse the impact of connected TV on the determination of the competent territorial jurisdiction. The AVMSD is drafted in such a way that only one Member State should have jurisdiction over an audiovisual media service 6 European Commission, Green paper Preparing for a Fully Converged Audiovisual World: Growth, Creation and Values, 24 April 2013, COM(2013) 231 final, 3; European Commission, First Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the application of Directive 2010/13/EU Audiovisual Media Service Directive - Audiovisual Media Services and Connected Devices: Past and Future Perspectives. 4 April 2012, COM(2012) 203 final, IPSOS MORI, Protecting audiences in the era of convergence and connected TV: Ofcom Research, Deliberative Research Report, 25 January 2012, 8 Article 1(a) AVMSD defines an audiovisual media service as follows: a service as defined by Articles 56 and 57 of the Treaty on the Functioning of the European Union which is under the editorial responsibility of a media service provider and the principal purpose of which is the provision of programmes, in order to inform, entertain or educate, to the general public by electronic communications networks within the meaning of point (a) of Article 2 of Directive 2002/21/EC. Such an audiovisual media service is either a television broadcast as defined in point (e) of this paragraph or an on- demand audiovisual media service as defined in point (g) of this paragraph. 4

7 provider. That objective has been accomplished through the country of origin principle. Pursuant to this principle, content only needs to be checked once by the authorities of the home country, rather than in multiple countries, which makes it easier for service providers to develop a cross- border business. Although the wording of the country of origin principle, which is laid down in article 2 AVMSD, is clear, it often remains difficult to determine the national applicable law. In particular for non- linear services that are not offered by a traditional broadcaster it proves to be difficult to determine the competent national jurisdiction. Moreover it should be recalled that the AVMSD only applies to providers under EU jurisdiction. While media services provided by non- EU based providers making use of satellite up- links in a Member State still need to comply with the AVMSD, this is not necessarily true for media services delivered over the Internet from countries outside the EU, but providing services targeting the EU. 9 Therefore we deem it relevant to analyse more into detail whether or not the country of origin principle in its current form is still appropriate to determine jurisdiction in a converged world where media services are increasingly provided over the Internet. 2 The criterion of editorial responsibility under pressure 2.1 Editorial responsibility 6. The concept of editorial responsibility is key in determining which natural or legal person is the media service provider, and therefore responsible for adhering to the rules laid down in the AVMSD. Moreover the concept is crucial for determining the competent national jurisdiction as the criteria in article 2(3) AVMSD are to be applied to the media service provider only, and not to any other person who may be involved in the content delivery value chain. 10 According to the AVMSD, a media service provider is the natural or legal person who has editorial responsibility for the choice of the audiovisual content of the audiovisual media service and determines the manner in which it is organised. 11 Explicitly excluded are the natural or legal persons who merely transmit programmes for which the editorial responsibility lays with a third party. 12 Examples of media service providers include traditional linear broadcasters such as BBC One or the National Geographic Channel as well as providers of non- linear services such as Channel 4 s on- demand service 4OD, which may include catch- up and archive content. 9 European Commission, Green paper Preparing for a Fully Converged Audiovisual World: Growth, Creation and Values, 24 April 2013, COM(2013) 231 final, J.F. FURNÉMONT, Establishment: editorial responsibility and effective control in S. NIKOLTCHEV (ed.), IRIS Special: Ready, set Go? The audiovisual media services directive, Strasbourg, European Audiovisual Observatory, 2009, Article 1(d) AVMSD. 12 Recital 26 AVMSD. 5

8 The concept of editorial responsibility is in its turn defined as the exercise of effective control both over the selection of the programmes and over their organisation either in a chronological schedule, in the case of television broadcasts, or in a catalogue, in the case of on- demand audiovisual media services. 13 Moreover it needs to be emphasised that editorial responsibility does not necessarily imply any legal liability under national law for the content or the services provided, and that Member States retain the possibility to further specify aspects of the definition of editorial responsibility (e.g. the concept of effective control ). 14 Key in identifying the media service provider is knowing who has effective control over both the selection and organisation of the audiovisual content. 2.2 New players entering the content delivery value chain 7. The definitions of media service provider and editorial responsibility have been drafted in an era dominated by traditional linear television broadcasting. Video- on- demand (VOD) services only started developing recently, and a large part of the available VOD services consisted and still consists of traditional catch- up services, via which television broadcasters offer content they have previously broadcasted through their linear services to be viewed at individual request. 15 In such cases it is quite obvious that the broadcaster will bear the editorial responsibility for the linear as well as the non- linear service. 16 However, not only the consumption but also the delivery and distribution of audiovisual content is changing significantly. 17 Up until a few years ago, the content provider (e.g. the broadcasting organisation) was solely responsible for all content broadcasted, and the operator transmitting the content (via terrestrial, cable or satellite) did not bear any content obligations. Nowadays, those network operators are no longer merely transmitting the television signals 13 Article 1(c) AVMSD. 14 Recital 25 AVMSD. Diverging national interpretations of effective control can lead to distortions on the internal market. Most national regulators qualify catch- up TV services as a traditional VOD service within the scope of the AVMSD, but the Italian regulator does not share this opinion. According to the Italian AGCOM internet providers offering non- linear services with catalogues consisting exclusively of programmes previously broadcast in linear mode (e.g. catch- up TV or archive services) are not to be considered as media service providers: GOP (2011), The new resolutions of the Italian media authority on the audiovisual media services via the Internet, 15 The approach taken in the AVMSD has however been considered as incomplete and premature since it was still impossible to predict with any certainty what the impact of technical, economic and user- related developments would be on on- demand services; See O. HERMANNS and P. MATZNELLER, Whose boots are made for walking? Regulations of on- demand audiovisual services in S. NIKOLTCHEV (ed.), IRIS Special: The regulation of on- demand audiovisual services: chaos or coherence?, Strasbourg, European Audiovisual Observatory, 2011, O. HERMANNS and P. MATZNELLER, Whose boots are made for walking? Regulations of on- demand audiovisual services in S. NIKOLTCHEV (ed.), IRIS Special: The regulation of on- demand audiovisual services: chaos or coherence?, Strasbourg, European Audiovisual Observatory, 2011, S. ARTYMIAK, Introduction to different forms of on- demand audiovisual services in S. NIKOLTCHEV (ed.), IRIS Special: The regulation of on- demand audiovisual services: chaos or coherence?, Strasbourg, European Audiovisual Observatory, 2011,

9 of the broadcasting organisation, but they are increasingly distributing the television signals, which means that they are making arrangements to capture the television channels they offer (into packages) to their subscribers. 18 In such a case it has become more difficult to determine who is editorially responsible for the content. 8. Applying the criterion of editorial responsibility in a connected media environment is even more problematic as many new and very diverse services and intermediaries or gatekeepers, who all want to have a slice of the cake, are entering the value chain. First of all we observed that telecom operators are offering their subscribers their own bundles of themed channels and their own VOD catalogues of movies and series. Moreover they often put an own user interface and electronic program guide in place via which the programmes or channels of the broadcasters can be accessed. To the extent that these players package and market linear programmes of others we can refer to them as aggregators. 19 Manufacturers of smart devices (such as smart TV s or game consoles) are also operating own portals and/or widgets through which over- the- top content (OTT) can be consumed. 20 Next to the linear and non- linear content supplied by traditional broadcasters, nearly every manufacturer has its own offer of internet- based applications and VOD services. Since the rise of Connected TV, User- Generated Content (UGC) platforms such as YouTube or DailyMotion are also easily accessible on the same screen as traditional broadcasts. These players consider themselves only as hosts in the sense of article 14 of the E- Commerce directive (hereafter ECD ), who are not responsible for the content hosted. 21 The European Commission seems to have shared that opinion as UGC platforms have been excluded from the scope of the AVMSD. 22 At the time of adoption of the AVMSD in 2007 and of its revision in 2010, the European legislator could hardly have foreseen the steadily growing popularity of those platforms. Over the past years however, it has become clear that an actor such as YouTube plays a crucial role in offering users access to 18 Cullen International, Study on the regulation of broadcasting issues under the new regulatory framework prepared for the European Commission (Information Society and Media Directorate- General), 22 December 2006, 11-14, ec.europa.eu. 19 W. SCHULZ and S. HEILMAN, Editorial responsibility: notes on a key concept in the regulation of audiovisual media services, in S. NIKOLTCHEV (ed.), IRIS Special: Editorial responsibility, Strasbourg, European Audiovisual Observatory, 2008, OTT can be described as the delivery of video, voice and data services without the intervention of a cable or telecom operator. 21 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market ('E- Commerce Directive'), OJ.L. 178, 17 July 2000, 1-16; The provider of an information society service cannot be held liable for content unless he becomes aware of the unlawful character of the content: ECJ, C- 236/08 - C- 238/08, Google France, 23 March 2010; and ECJ, C- 324/09, ebay v. L Oreal, 12 July 2011, wwww.curia.eu. 22 Recital 21 of the AVMSD excludes from its field of application activities which are primarily non- economic and which are not in competition with television broadcasting, such as private websites and services consisting of the provision or distribution of audiovisual content generated by private users for the purposes of sharing and exchange within communities of interest. 7

10 professional and non- professional audiovisual content. YouTube hosts a massive amount of content and to optimise the user experience it organises all content within different categories depending on the topic of the uploaded video (e.g. most popular, recommended channels, etc). Another category of new players consisting of providers of information society services is starting to focus on television- like services. 23 One example is Apple TV, which allows the user to stream music and videos from itunes to his TV for a fee. It should be emphasised that Apple s closed ecosystem can put a lot of pressure on the content providers. 24 Another large player entering the TV market is Google with its Google TV, which allows a user to retrieve audiovisual content (also content only available for a fee) from different sources as well as related information in a way similar to how he would use the Google search engine All these players stand between content providers and users and carry out tasks that are to a certain extent similar to those of a content editor. Hence these actors should at least be held liable for their own activities and accept certain liability rules. 26 Moreover, they determine to a certain extent the content that will be visible on the screen of the user, as they make a preselection of the content and/or determine how it is prioritised. As a result, the platform operator, portal operator or device manufacturer (all three functions may also be combined by one and the same entity) has significant control over the diversity of content and opinions reaching the user. This control gives these actors a gatekeeper position that as such is currently not covered by any media regulation. 27 Consequently the main question is if and how all these gatekeepers, in all their different forms, fit into the existing regulatory framework. 2.3 Effective control 10. The aforementioned gatekeepers will only fall within the scope of the AVMSD and will consequently only need to adhere to the AVMSD rules if they 23 Pursuant to recital 24 AVMSD, television- like services should be understood as services that compete for the same audience as television broadcasts, and that the nature and the means of access to the service would lead the user reasonably to expect regulatory protection within the scope of the AVMSD. 24 E. SCARAMOZZINO, La télévision européenne: face à la TV.2.0?, Brussels, Larcier, 2012, ; It should be stressed and equally not surprise that Apple is eager to control the content delivery chain from A tot Z. 25 S. ARTYMIAK, Introduction to different forms of on- demand audiovisual services in S. NIKOLTCHEV (ed.), IRIS Special: The regulation of on- demand audiovisual services: chaos or coherence?, Strasbourg, European Audiovisual Observatory, 2011, O. HERMANNS and P. MATZNELLER, Whose boots are made for walking? Regulations of on- demand audiovisual services in S. NIKOLTCHEV (ed.), IRIS Special: The regulation of on- demand audiovisual services: chaos or coherence?, Strasbourg, European Audiovisual Observatory, 2011, European Parliament (Committee on Culture and Education), Draft report on connected TV (2012/2300(INI)), 31 January 2013, 9; Dutch concept response to the Green Paper Connected TV: Preparing for a Fully Converged Audiovisual World: Growth, Creation and Values,

11 have effective control over both the selection of the programmes and the organisation either in a chronological schedule, in the case of television broadcasts, or in a catalogue, in the case of on- demand audiovisual media services. In order to assess what type of control is necessary and sufficient to be regarded as a media service provider, a clear definition of the terms selection and organisation is required. In its literal sense, the former refers to whether audiovisual content is included in the service, while the latter refers to how content is placed in the service The selection of the programmes 11. A first question that needs to be raised is whether it is sufficient for a provider to have the possibility de jure and de facto of ex post excluding content from its service (when not in conformity with its terms of use) to assume that he has effective control over the selection of the content. Or is it necessary to take positive ex ante decisions to include content in order to be qualified as a media service provider having effective control? Some scholars are of the opinion that the AVMSD does not require an ex ante selection of content but that editorial responsibility can equally result from an ex post removal and the stimulation of users to upload audiovisual content (the so- called guided self- selection model). 29 Such broad interpretation of effective control, allowing ex post control, would offer a great protection for the public but imposes regulatory costs on operators who consider themselves only as hosts within the meaning of article 14 ECD. Consequently it should not come as a surprise that such interpretation has already been rejected in the context of linear broadcasting, 30 and that recently a number of media regulators also explicitly rejected such interpretation in the context of non- linear services. 31 With regard to UGC platforms, such as YouTube or DailyMotion, the CSA, the media regulator of the French Community of Belgium, is of the opinion that there is neither any selection of the videos (everyone can upload), nor any organisation of the videos in function of their content by the platform operator. Furthermore the CSA deems that a secondary control cannot be considered as editorial responsibility when the intervention takes place ex post (on the basis of complaints) and when it does not imply any active selection ex ante. 32 In a 28 W. SCHULZ and S. HEILMAN, Editorial responsibility: notes on a key concept in the regulation of audiovisual media services, in S. NIKOLTCHEV (ed.), IRIS Special: Editorial responsibility, Strasbourg, European Audiovisual Observatory, 2008, Ibid., 21; J. VERWEIJ, YouTube en de Richtlijn audiovisuele mediadiensten, Mediaforum 2011, nr. 4, W. SCHULZ and S. HEILMAN, Editorial responsibility: notes on a key concept in the regulation of audiovisual media services, in S. NIKOLTCHEV (ed.), IRIS Special: Editorial responsibility, Strasbourg, European Audiovisual Observatory, 2008, R. CHAVANNES and O. CASTENDYK, Article 1 AVMSD in O. CASTENDYK, E.J. DOMMERING and A. SCHEUER (eds.), European Media Law, Alphen a/d Rijn, Kluwer Law International, 2008, CSA (Collège d autorisation et de contrôle), Recommandation relative au périmètre de la régulation des services de medias audiovisuels, 29 March 2012, 11-14, 9

12 similar way the Italian regulator AGCOM stated that websites which do not provide for ex ante selection of user generated content, but only provide an indexing activity of the content uploaded by users, do not fall under the scope of the AVMSD and are not editorially responsible for the uploaded content. 33 Finally the UK Authority For Television On Demand (hereafter ATVOD ) also shares this view The foregoing however does not mean that the provider of a video platform can never be subject to the AVMSD. In a decision regarding the video platform BNP TV operated by the British National Party, ATVOD judged that the catalogue of programmes had been clearly selected from a coherent and distinct editorial proposition, and emphasised that this did not entirely exclude reactive editorial control as the viewers were encouraged to send in short videos of their local areas. In determining that BNP TV was editorially responsible, ATVOD found it relevant that viewers could not upload videos directly to the platform, like on YouTube, but they had to submit them via an administrative e- mail address Although it follows from the foregoing that the providers of a UGC platform will in most cases not be subject to the AVMSD, it does not imply that all content available on UGC platforms falls outside the scope of the AVMSD. More and more professional content and channels for instance are appearing on the YouTube platform. 36 One example is BBC s Top Gear YouTube channel of which the ATVOD judged that it constitutes a VOD service for which BBC bears the editorial responsibility, and which consequently needs to comply with the AVMSD rules. 37 Also in a number of other Member States professional channels on video platforms are regarded as media providers in the sense of the AVMSD. 38 The assessment becomes more complex when own content is combined with UGC content. In such cases the Dutch media regulator makes a clear distinction: on the one hand it states that the platform provider is only editorially responsible for its own content, whereas the third party content on its platform should comply with the AVMSD if the responsible channel can be considered as 33 AGCOM, Web- radio and Web- TV: F.A.Q., 34 ATVOD, Guidance on who needs to notify, Edition 3.1, Originally published on 19 October 2010, republished on 21 March 2011, para. 2.19, ATVOD is the independent co- regulator for the editorial content of UK video- on- demand services that fall within the statutory definition of On Demand Programme Services. 35 ATVOD (BNP TV), Scope determination, 29 November 2010, 36 P. VALCKE and J. AUSLOOS, Audiovisual Media Services 3.0: (Re)Defining the scope of European broadcasting law in a converging and connected media environment in K. DONDERS, C. PAUWELs and J. LOISEN, Handbook on European media policy, Palgrave (forthcoming,), ATVOD (Top Gear YouTube), Scope determination, 3 May 2011, The decision has been appealed to OFCOM, which consequently upheld the appeal and quashed the decision of ATVOD. In the appeal decision of 18 January 2013 OFCOM decided that not all elements of an On- Demand Programme Service were met. The question of editorial responsibility was however not analysed by OFCOM. 38 E. MACHET, New media & regulation: towards a paradigm shift? New services and scope: What s in, what s out revisited, Comparative background document to 35th EPRA meeting, Portoroz, 31 May 2012, 15, Austria, Belgium, Finland, Italy, The Netherlands and Slovenia. 10